NETHERLANDS – The new 11.7 billion euro Dutch metal industry PME fund – created from the recent merger of the PMI and SVM funds – is searching for managers to run an emerging market mandate and high-yield debt mandate together worth 1.2 billion euros.

PMI, the Dutch pension fund for workers in the metal industry, merged with SVM, the pension fund for the metal and electrical industry, last month. They had collaborated last year to bring the funds’ management in line with each other.

The new fund, PME (Bedrijfstakpensioenfonds Metalektro), is now looking for managers to run emerging market debt, and high yield mandates worth 1.2 billion euros (split equally), in addition to an SRI equity manager for a 100 million euro mandate. It is estimated that the process of selection will be complete by July this year.

The decision to diversify its fixed income investments was made by the board of trustees at the end of last year. The 1.2 billion euros will be switched out of European government bonds, which are felt to be yielding too low a return to cope with liabilities. European government bonds now account for 22% of total assets. Exposure to equities remains unchanged at 35% of total assets.

Current managers include F&C London, State Street Global Advisors, Merrill Lynch Investment Managers, and Vanguard Group, Valley Forge.

Last year, Dutch pensions watchdog PVK demanded that pension funds must be 105% funded. PME is currently 101% funded and it is hoped that increased returns from the asset switch and increased member premiums to 15.6% will enable the scheme to reach the 105% requirement by the end of 2003.